Corporate tax has rarely received as much attention as in recent years. The coalition government has enacted a series of policy changes – the most prominent being an 8 percentage point cut in the main rate – with an explicit aim of increasing the competitiveness of the UK’s corporate tax system. Concurrently, there have been prominent debates about the types of policies individual governments use to attract mobile investments, about corporate tax avoidance and about how the international corporate tax system can be improved.
In this election briefing note, we review the policy changes since 2010 and assess where this leaves the UK regime in an international context. Despite the large number of changes in this parliament, challenges remain for the next government. In particular, the UK has a corporate tax base that embeds a number of distortions, we are likely to face further international competitive pressure and we must balance the desire to be competitive with the aim of cooperating with international attempts to reduce avoidance.
This briefing note forms part of the IFS election 2015 analysis, funded by the Nuffield Foundation.